foster
Michael G. Foster school of business
University of washington
Fall 2011
Also: Where in the World is Ali Tarhouni? page 10 Early Risers; The Young Executives of Color Program page 14 Entreprenomic Impact page 16
Mobile Man
Legendary deal-maker Wayne Perry delivers freedom of wireless communications to the masses page 26
Think differently. Make a difference. It’s the Washington Way.
Be a Part of the Biggest Night in Pacific Northwest Business Join Us for the 20th Annual Foster School Business Leadership Celebration • Hear Jamie Dimon — one of Time magazine’s 100 most influential people and CEO and chairman of JPMorgan Chase & Co. • Celebrate iconic Northwest leaders • Make valuable business and alumni connections
Wednesday, November 2, 2011 5:45-9:15 p.m. Sheraton Seattle Grand Ballroom 2011 DISTINGUISHED LEADERSHIP AWARD RECIPIENTS L. PATRICK HUGHES (BA 1957) BRUCE A. NORDSTROM (BA 1955) JOHN N. NORDSTROM (BA 1959)
FEATURED LEADERSHIP ADDRESS: JAMIE DIMON
To purchase tickets or become a sponsor, visit
foster.washington.edu/leadershipcelebration
contents
On the cover
10 Where in the World is Ali Tarhouni? Rebel Libyan finance chief hunts for funds and hope
14 Early Risers Young Executives of Color Program fosters excellence from high school to business school and beyond
16 Entreprenomic Impact
The UW Business Plan Competition doesn’t just build better entrepreneurs; it launches successful companies into an economy that needs them
26 Mobile Man
Legendary deal-maker Wayne Perry delivers freedom of wireless communications to the masses
FALL 2011
1
contents
Dean
25
9
James Jiambalvo Managing Director Marketing & Communications
Eric Nobis Managing Editor
Renate Kroll Contributing Writers
Ed Kromer, Andrew Krueger, Jocelyn Milici Ceder, Eric Nobis, L.A. Smith
28
34
Photography
Matt Hagen (principal), Paul Gibson Design
a.k.a. design
Departments
4 In the News
Fast and Flawless, Green Innovation, By the Numbers, We Have a Winner, Green Gold, Best New Ventures, Slalom Strategy, Attitude is Everything, What do You Think?, MBAs Go Global
20 Faculty
Market Knows Best, Socratic Methodist, Distinguished Teaching, Quantum Accountant, Research Briefs
26 Alumni
Wayne Perry, Saara Romu, Jason Child, Suzan DelBene, Events Calendar, William Khazaal, Claire Lee
32 First Person
Old School, New School
2 fo s t e r B USI N ESS
Foster School of Business Marketing & Communications University of Washington
Box 353200 Seattle, WA 98195-3200 206.543.5102 206.221.7247 (fax) On the Web
foster.washington.edu Foster Business is published twice a year by the University of Washington Foster School of Business. The publication is made possible by donations from alumni and friends. No state funds are used in its production. Change of Address?
fans@uw.edu Comments?
bizmag@uw.edu Think differently. Make a difference.
Positive Momentum Six years into my deanship, one thing I have in common with every Foster student is that I’m still learning about leadership every day. Whether from our own Center for Leadership and Strategic Thinking or the popular press, there are always new practices and philosophies to consider. I also have the great good fortune of interacting with outstanding executives in our community and, especially, on the Foster School’s Advisory Board. These proven leaders provide me with both information and inspiration. One lesson I’ve learned is that you have to build on positive momentum even in difficult economic times. We do this in many ways, but especially in faculty hiring. Bloomberg BusinessWeek’s specialty rankings recently rated our MBA Program number two in marketing behind perennial number one, Northwestern’s Kellogg School, and we were ranked fifth in accounting. But we’re not resting on our laurels. This summer we hired three outstanding faculty members to enhance our strengths in these areas. In marketing, we hired two proven scholars and teachers—one from Kellogg and one from Yale. In accounting, we hired a superb teacher who has won research awards and also has high-level real-world experience as the SEC’s deputy chief accountant for professional practice. We also hired three additional faculty members in other departments to add to the school’s intellectual horsepower and teaching prowess. Another area where we’re making significant progress is entrepreneurship, in which we were ranked 14th by U.S. News & World Report. A particularly exciting development is that the UW’s Center for Commercialization is raising a $20 million fund that will focus on creating businesses based on UW technology. At Foster, we’re developing a new course on tools and techniques for evaluating technology-focused business plans. At the end of the course, a select group of students will sort through applications for funding and prepare due diligence reports for the fund’s advisors. By the time these students graduate, they will have exceptional real-world experience and
skills to supplement their knowledge of theories and frameworks. We are also moving forward with an ambitious plan to improve career services for our students. For undergraduates, we will hire our first director for career services as part of a $700,000+ annual commitment we are making to ensure our students have exceptional job opportunities. The Ernst & Young Center for Undergraduate Career Advancement and our MBA Career Services will be at the heart of the Phase II building opening next summer. This will be the first time that the school has had a career center consistent with the caliber of its great students. Finally, since we’re discussing leadership, don’t forget about the Business Leadership Celebration this fall. On November 2nd, we will honor three amazing alumni who have helped shape Seattle. Bruce and John Nordstrom were part of the third generation of family members who grew the iconic company’s annual revenues from $57 million to $3 billion over their 20+ year tenure. Pat Hughes is a serial entrepreneur who founded the world’s largest provider of foundation construction equipment. Keynoting the event will be JPMorgan Chase chairman and CEO Jamie Dimon. The Leadership Celebration is our biggest business community event of the year and a terrific opportunity to connect with close to 1,000 alumni and friends. See the inside cover to learn about how you can join our students, faculty members and business partners for a great evening with the UW Foster community. With thanks for all you do for Foster and the University of Washington, Sincerely,
James Jiambalvo Dean, Michael G. Foster School of Business Kirby L. Cramer Chair in Business Administration
Fall 2011
3
in the news
Fast and Flawless Phase II construction ahead of schedule; interior work continues What a difference a few months make. In April, a steel skeleton offered merely a notion of what Phase II of the new Foster School of Business headquarters will look like. Now that view is a bit more concrete. And glass. And brick and wood. The exterior of PACCAR Hall’s next-door neighbor is largely complete, with a flurry of activity continuing inside the new multipurpose facility. Crews are installing heating, ventilation, electrical, elevator, fire and water systems, and framing walls.
4 fo s t e r B USI N ESS
According to Pete Dukes, chair of the Foster School’s Building Committee, the project is on budget and ahead of schedule. And it is on track to meet LEED standards for environmentally friendly construction. The 63,000-square-foot Phase II facility will include classrooms, the Dean’s office, IT services, Undergraduate and Graduate Program offices, the MBA Career Center, the new Ernst & Young Undergraduate Career Center, CIE’s new Herbold Innovation Lab, and the Anthony’s Home Port Executive Meeting Room.
The Phase II project, with a construction budget of $28.6 million, is financed by the UW. It is scheduled for substantial completion in May 2012. To see the progress of Phase II in real time, visit oxblue.com/pro/open/sellen/ uwbusiness. n
Green Innovation
By the Numbers
$22,500 awarded to clean technology winners
Did you know…?
Teams who won the 2011 UW Environmental Innovation Challenge invented solutions to some of the world’s most pressing environmental issues. Wind and biomass energy. Electric car improvements. Water purification. Algal biofuel efficiency. In all, 17 PhD, graduate and undergrad student teams from UW, WSU, WWU and SPU tackled the environment with clean-tech innovations.
100,143
Grand Prize of $10,000 | Voltaic UW undergrad engineers created an electric vehicle modular drive train that can replace drive trains of gas-powered engines in existing models. The electric module can be customized to fit inside any car, and the team displayed a Honda outfitted with its prototype electric engine to demo how it powers the car.
The dollars donated as a class gift by the 2011 Full-Time MBA graduates, for the largest class gift in school history
98
The percent of participation by said MBA grads in giving to the class gift
55,567*
The number of Foster alumni worldwide
2nd Prize of $5,000 | PotaVida A UW PhD team (an electrical engineer, bio-engineer and policy analyst) created a device that measures water quality with a reusable, solar-powered electronic indicator for monitoring solar disinfection of drinking water. Their inexpensive indicator won a design award last year and will be field tested in Bolivia this year. Honorable Mentions of $2,500 each • Pterofin demonstrated an affordable, versatile alternative to wind turbines; the new device is lighter than current wind technology and harnesses wind energy at lower wind speeds. • BioTek has a patented and patent-pending suite of tools to help optimize and scale the growing algal biofuel industry; their instruments and software are low-cost and field-ready. • C6 Systems created a novel system to turn woody biomass into charcoal (or biochar) at forestry sites; their biochar can be sold to heating/electric plants or used to enrich soil. The challenge is sponsored by Foster’s Center for Innovation and Entrepreneurship, the UW College of Engineering, College of the Environment and Center for Commercialization. n
43,965
The number of Foster undergrad alumni worldwide
12,739
The number of Foster MBA alumni worldwide
670
The number of Foster PhD alumni worldwide n *Since a number of alumni have more than one degree from Foster, undergrad, MBA and PhD numbers total more than 55,567.
We Have a Winner! Congratulations to Joanne Dawson Kicinski (MBA 1983), the winner of a pair of tickets to anywhere Alaska Airlines flies! Kicinski saw our request for emails in the spring issue, and entered hers to be included in the drawing. She and her husband still have close ties to the UW with three kids who are Huskies, and they hope to go to Hawaii or Alaska with the tickets. A very special thank you to our friends at Alaska Airlines for their continuing support! We are always looking for more alumni email addresses. If we don’t have yours yet, please go to foster.washington.edu/keepintouch and let us know. n
Fall 2011
5
IN the news
Green Gold PACCAR Hall awarded LEED Gold certification for environmentally friendly construction The new home of the Foster School of Business has earned LEED Gold certification from the US Green Building Council. LEED is the nation’s gold standard for design, construction and operation of high-performance, environmentally sound buildings. PACCAR Hall achieved LEED Gold for its responsible use of energy, lighting, water and materials, as well as a variety of other sustainable features and strategies. PACCAR Hall’s inherent greenness contributed significantly to the University of Washington earning the Sierra Club’s distinction of “America’s Coolest School” for sustainability this year. n
21.3% energy savings 34.2% annual water savings 99% certified wood products 13% of materials sourced locally 21.7% recycled content in materials 96% construction waste recycling
natural ventilation controllable lighting green roof system low VOC paints, adhesives and carpet public transit, bike shelters, electric vehicle plug-in purchase of green power no urea-formaldehyde treated wood non-chemical treatment of cooling towers green housekeeping
6 fo s t e r B USI N ESS
BEST NEW VENTURES $60,000 for winners of UW Business Plan Competition Budding entrepreneurs from Pacific Northwest universities created start-ups in clean-tech, bio-tech, retail, agriculture and other fields at the 2011 UW Business Plan Competition. This year’s prize money breaks the $1 million mark for 14 years of start-up seed funding. PotaVida won the Grand Prize worth $25,000 and another $2,500 for Best Innovative Idea for a low-cost, reusable solution measuring quality and purifying water via solar disinfection. Their device received a design award from the Rockefeller Foundation prior to the UW competition. The UW team includes Charlie Matlack (PhD student in electrical engineering), Tyler Davis (PhD student in public policy), Damon Gjording (Executive MBA student) and Jacqueline Linnes, PhD. Stockbox Grocers, an MBA team from Bainbridge Graduate Institute, won Second Prize worth $10,000 and another $2,500 for Best Service/Retail Idea for their affordable fresh produce business targeting urban food deserts. Stockbox offers a mini grocer service tucked in a reclaimed shipping container. Two Finalist Prize winners took home $5,000 each. LodeSpin Labs, a UW team of engineering, material science and MBA students, developed a non-toxic tracer that works with cutting-edge Magnetic Particle Imaging (aimed at replacing CT and MRI scans for imaging patients with heart disease and cancer). Solanux, a WSU and University of Idaho team, manufactures potato-based food ingredients that help improve insulin levels. Their starch product can replace existing starch in processed foods, like fries. Four other teams won $2,500 “best idea” awards for innovations in medical technology, clean technology, travel e-commerce and green-building software. It takes a village to launch a start-up. Hundreds of VC, angel and entrepreneurial firms and individuals sponsored the event or served as judges, mentors or coaches. n PotaVida
Stockbox Grocers
Slalom Strategy Leading local consulting firm sponsors spring strategy fair When first-year MBA students in the Global Strategic Management course took on the challenges of identifying and presenting Blue Ocean strategies for the Spring Strategy Fair at the Foster School in April 2011, they did so with a significant competitive advantage: the help and generosity of Slalom Consulting. Slalom was the exclusive sponsor of the event, providing not only financial support, but also helping to attract a panel of remarkable judges that included Nick Dykstra (MBA 1989), director of finance at Intellectual Ventures; Tim Engle (MBA 2001), president of Saltchuck Resources; Kris Klein (MBA 1995), managing partner at Lenati Consulting; Dawn Loeliger, executive
director of marketing operations and innovation at Group Health; Lisa Morris-Wolff (MBA 1995), marketing consultant at Lenati Consulting; Rietta Stoneman, (EMBA 1994), vice president of IT at Concur Technologies and Rick Wong (MBA 1985), vice president at Microsoft Corporation. Andrew Houston, a strategy practice consultant in Slalom’s Seattle headquarters office, rounded out the panel of judges and was instrumental in bringing Slalom’s sponsorship to the event. “There are a couple of reasons we were keen on sponsoring the Strategy Fair,” Houston says. “We’re locally based, and this experience gives us opportunities to build ties with the business and academic communities here.”
But networking wasn’t Slalom’s—or Houston’s—only motivation. “Personally and professionally, if I don’t continue to learn, I’m going to get stale and not be as much value to my clients or to my firm,” Houston says. “This was a great opportunity to expand my mind and get exposed to new ideas and concepts.” Judges provided tough, constructive feedback to the competing MBA teams, and in the end the prevailing team of Colin Beazley, Sara Buzak, Sonia Kuriakose, Ben Miller and Andy Passic walked away with bragging rights for their Blue Ocean strategy for “Trader Joey’s,” a convenience store off-shoot of the popular boutique grocery. n
Fall 2011
7
IN the news
Attitude is Everything “Expect to win.” That was the message Husky football coach Steve Sarkisian delivered at the Foster School’s latest CFO Roundtable held in May. Coach Sark’s presentation, Lessons in Leadership, featured the coach’s personal philosophy and recipe for success as a leader, which, not surprisingly, starts with attitude. “The longer I live, the more I realize the impact of attitude on life,” Sarkisian said. “It is more important than the past, than education, than failures, than successes, than what other people think or do. It is more important than appearance, talent, or skill.” The coach went on to share some of his best practices for successful leadership, sparking a lively discussion on how to grow leaders, whether in the boardroom or on the 50-yard line. “You must have a philosophy,” Sarkisian said, explaining that he insists on doing things better than they have been done before. Pairing that philosophy with a firm belief, the coach maintains, is the foundation of success. That, and authenticity. “It is not about want to,” he said. “It is who you really are and what you represent.” The CFO Roundtable promotes communication between CFOs of leading corporations and UW faculty, fusing academia with industry, and exploring research on current topics of concern to CFOs. The Roundtable provides a means for CFOs to share their knowledge and learn about the latest finance research. The unique focus of the CFO Roundtable on research and knowledge dissemination differentiates it from other finance-related organizations. CFOs gain access to input from faculty and other CFOs on key issues. Faculty learn the inside perspective on the financial issues currently arising in the business world. The CFO Roundtable is a Foster School of Business program, conducted in cooperation with the firm Cushman & Wakefield. n
What do YOU think? In the last issue of Foster Business, we asked you to name the last great business book you read and to tell us why you liked it. Your answers included a few surprises and at least one perennial favorite. “My latest pick is “Obliquity” by John Kay. I loved its counterintuitive idea that our goals are best achieved indirectly. According to Kay, the most profitable companies are not the most aggressive in chasing profits; and the happiest people do not set out to pursue happiness... Sounds true!“ –Nikos Kokkalakis (MBA 1988) “Michael Lewis’s “The Big Short: Inside the Doomsday Machine,” received from my sister the UW PhD in Theology (of all people!). Excellent tale of the handful of folks who foresaw the crisis in the real estate and mortgage markets and profited by shorting this market.” – Bruce A Strand (BA 1975, MBA 1977) “‘How to Win Friends and Influence People.’ Carnegie’s observations are timeless and spot on.” – Bob Myers (MBA 2011) Next issue’s question is: What Foster business course is most useful to you now? Go to foster.washington.edu/ readerquestions to share your answer.
8 fo s t e r B USI N ESS
MBAs Go Global Each spring, Foster MBA students join faculty on study tours; two-week whirlwinds packed with business, government and non-profit meetings. They immerse in foreign cultures, absorb globalization strategy and prepare for real-world application of experience gained abroad and in class. Here’s a taste of 2011 study tours in Asia (Hong Kong, India, South Korea and Vietnam), Europe (Austria, Germany, Turkey, Finland, Sweden) and South America (Peru). MBAs and faculty also found time for local flavor and adventure. Who could resist? n
Asian Economics “This trip was a great experience. It was an opportunity to deep dive into businesses in different countries at different stages of economic development.” Andrew, Executive MBA student
Entrepreneurial Spirit “The TMMBA study tour provided me visibility to the entrepreneurial spirit thriving across borders, cultures and economies. Understanding the different levers that influence success abroad helps me better understand how to be adaptable in my own ventures.”
Scandinavian Innovation “What does it look like when a company combines design thinking with solid business principles? It was especially interesting to see how companies are uncoupling traditional product-focused thinking and innovating around solutions—developing new ways of delivering light rather than just making a better light bulb.”
Patrick, Technology Management MBA class of 2011
Alissa, MBA class of 2011
Tiny Nations, Big Dreams “It is so interesting to see how a nation as small as Korea has risen to become such a successful economy. There are definitely lessons to be learned from visiting nations as innovative in business strategy as Korea.”
Lands of Contrasts “As a study tour leader my goal was to showcase that India is a land of contrasts and how, amid all the chaos, innovation and entrepreneurship thrive.” Ramnika, MBA class of 2011
Nicholas, MBA class of 2011
Click here to view a slideshow of more MBA study tour photos
Fall 2011
9
Where in the World is
About six months ago, Ali A. Tarhouni, a senior lecturer in the Foster School, was named finance minister by the Libyan opposition national council. The group arranged a transitional government in the hope that Moammar Gadhafi would be ousted from power. In the months that have ensued, Ali’s colleagues, friends and students at the Foster School have watched events in Libya and followed his progress and the maneuvers of the opposition through interviews by Reuters, CNN, NPR and The New York Times. “We hope Ali and his relatives are safe and not in harm’s way. We’re also proud to have one of our longtime faculty members playing a significant role in Libya’s transitional government,” says Jim Jiambalvo, dean of the Foster School. A native of Libya who, for 40 years, has opposed Gadhafi, Tarhouni returned to Libya in early March. He has taught at the UW since 1985, and is married to Mary Li, a lawyer for the Washington Attorney General’s office. As we go to print, the situation in Libya is rapidly changing. At press time, Tarhouni was representing the rebel movement in Tripoli as a “stand-in prime minister,” working to restore security, running water, power and gas to the capital. Due to unreliable Internet infrastructure and more basic issues around consistent access to electricity, we were not able to reach Ali to get the very latest. We received permission from The New York Times to reprint the following article, which will give you some insight into the amazing realm our beloved finance professor inhabited in the early days of the revolution.
Ali Tarhouni? Rebel Libya Finance Chief Hunts for Funds and Hope By Kareem Fahim
Reprinted with permission from The New York Times, June 3 ©2011 Published: June 3, 2011 BENGHAZI, Libya
© iStockphoto.com / rubenhi
A
tanker of diesel fuel had to be paid for, and oil fields needed protecting. A youth group wanted help avoiding eviction from their building and a blind woman just wanted to be reassured that everything would be all right. For hours on Sunday, Libya’s rebel finance minister, Ali Tarhouni, fielded requests and juggled crises during a dash of a day that slowed only when he demanded a few minutes to himself, to smoke a cigarette in the garden of his office by the sea. In a city that feels leaderless and adrift, Mr. Tarhouni is often looked to not only as finance minister, but as a shoulder to lean on, a sympathetic ear. And he may be most effective in that capacity: Col. Muammar el-Qaddafi’s opponents say they are flat broke. For months, the NATO airstrikes have kept the rebel movement breathing by preventing its fighters and stronghold here from being overrun by Colonel Qaddafi’s troops. But Mr. Tarhouni said that without a quick infusion of funds, they may soon be left in the dark. He said if the Qatari government, the rebels’ largest financial backer, did not “come to our rescue” by paying for
diesel fuel now sitting out of reach in a tanker off the coast, the electricity in Benghazi would be cut by midweek. “I’m sick and tired of this,” he said, explaining legal hurdles that have kept the rebels from receiving pledged funds. “We literally have days before the lights are off.” As manager of the rebels’ finances, Mr. Tarhouni is among the most critical players in the movement trying to overthrow Colonel Qaddafi, an effort that gains broader international recognition by the day. He has established himself as a pragmatic, and occasionally audacious, leader, who in the early days of the uprising ordered the rebels to rob a branch of the central bank in Bengazi where they found the equivalent of more than $320 million. “Basically, we drilled holes,” Mr. Tarhouni said, explaining how they opened the safe. AMONG opposition leaders, Mr. Tarhouni occupies a unique place. As an economics professor with a populist streak, he bridges a divide between the technocrats who have returned
fall 2011 11
12 fo s t e r B USI N ESS
MR. TARHOUNI met his wife, Mary Li, a lawyer who works for the Washington attorney general, while they were both students in Michigan. Mr. Tarhouni is on unpaid leave from the University of Washington, and his family, including four children, are still in the United States. One of his sons plans to join him here soon, and Mr. Tarhouni said he planned to put him to work. On a recent Sunday, his daily hunt for money started early, about 8:30 a.m., in a 1930s Italian villa where Mr. Tarhouni keeps his office. He and about 10 aides sat with laptops at a long wooden conference table, figuring out who should deal with the tanker, and how to coordinate payments to cities in the west, under attack by Qaddafi soldiers and desperately in need of money and the ship’s fuel. “I have areas that are besieged, people that are dying every day, and I can’t help them out,” he said. “I’m not sure that this simple, straight message is reaching our friends.” Envoys from the United States and France visited his office, and left, with no answer to his problems. About 4 p.m., he disappeared to try to take a nap, but an aide woke him as soon as he removed his shoes. Later, at a news conference, he urged foreign governments to send money, showing emotion but also a talent for brinkmanship. Later, touring a youth center in a former government security building, he asked the young activists about their monthly finances and spoke frankly about his inability to help. “Unfortunately, we’re bankrupt,” he said. Later, in his car on the way back from visiting a local businessman doing charity work, he fretted about the tanker. “I’m watching a clock,” he said. “I need $90 million.” It is hard to tell what role Mr. Tarhouni and the other rebel leaders will play in the future. They have said they would not run in an election that would follow Colonel Qaddafi’s leaving power, but could run in subsequent campaigns. At the same time, their self-appointed roles have given them broad visibility and recognition in a country with few well-known political leaders. In the evening, walking through the streets by the courthouse, Mr. Tarhouni was mobbed by people who knew him from television or remembered his YouTube appearances during the uprising, when he appealed to Colonel Qaddafi’s soldiers not to fire on protesters. As he walked, he remembered the vibrant city he left behind in 1974: the coffee shop where he and his friends talked excitedly about the Egyptian leader Gamal Abdul Nasser and the theater where he saw the region’s best performers, like the singers Fairuz and Abdul Halim Hafez. But the city he saw was a neglected shell. The work of the revolution had made such reflection difficult. “The longer it takes,” he said, “the more you have to remind yourself what it’s about.” The New York Times All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution or retransmission of the Material without express written permission is prohibited. n
© iStockphoto.com / jcarilleti
from exile or remain abroad, and home-grown academics and former Qaddafi government officials. He is blunt when describing the rebels’ desperate straits, using expletives to talk about donors lagging in their payments. At the same time, Mr. Tarhouni, who abruptly took a leave from his job teaching economics at the University of Washington to join the revolution, can appear a practiced politician. On a recent tour of the Benghazi courthouse, the emotional heart of the Libyan revolt, he was busy shaking hands and posing for pictures with children. But his primary focus is on finding money, and that has not been easy, not since the rebels robbed the bank. An effort to secure loans from the United States backed by frozen Libyan assets has foundered. “I had two meetings with the Treasury. At the end of the day, they were not productive from my way of looking at things,” he said. And Mr. Tarhouni, the son of a Benghazi merchant, has also been unable to tap Libya’s oil wealth. After attacks on oil installations by Colonel Qaddafi’s soldiers in April, oil production was either stopped or slowed, a distinction the rebels have refused to clarify. Mr. Tarhouni said that full production would not resume until the facilities were secure, but also that the rebels had ruled out hiring mercenaries to guard them. Talking about that decision, Mr. Tarhouni sounded a note of caution rarely heard from his movement, which at times has seemed willing to make almost any deal necessary to remove Colonel Qaddafi, and is almost entirely reliant on foreign powers to keep it in the fight. “I’m not about to start the Iraqi thing,” said Mr. Tarhouni, whose office has been besieged by visits from private security companies. He was also cautious in reacting to an apparent offer of amnesty for Qaddafi officials made over the weekend by Mustapha Abdul Jalil, the chairman of the rebel Transitional National Council—another attempt to quickly end the conflict. The language of the offer was confusing, but Mr. Abdul Jalil seemed to suggest that officials who defected now—regardless of what they had done—would be forgiven by the rebels. Mr. Tarhouni said the issue was more complicated. Some people deserved amnesty, but others, especially with “blood on their hands,” should be held accountable, he said. Mr. Tarhouni’s political activism started when he was in college, first in Benghazi as an undergraduate and later during graduate studies at Michigan State University. His classmates in Michigan included Moussa Koussa, who went on to become one of Colonel Qaddafi’s closest allies. As the Qaddafi government started executing student activists in the mid-1970s, Mr. Tarhouni remembered that he and other Libyan students had to twist Mr. Koussa’s arm to sign a letter “that basically said Qaddafi was a murderer.” Mr. Koussa shocked the Qaddafi inner circle when he defected in late March.
In a city that feels leaderless and adrift, Mr. Tarhouni is often looked to not only as finance minister, but as a shoulder to lean on.
fall 2011 13
Early risers Young Executives of Color Program fosters excellence from high school to business school and beyond
14 fo s t e r B USI N ESS
I
magine waking up on a dark, cold Northwest Saturday morning, getting dressed in your best business attire, taking a long ride—in a car, on a bus, on a ferry—and arriving on the UW campus just in time to start a day filled with professional development and leadership activities, networking with peers and mentors, and lectures rooted in business disciplines such as accounting, marketing, finance, entrepreneurship, information systems, ethics and international business. Now, imagine you’re 15 years old. What kind of kids, you may wonder, would do such a thing? And not just once, but on the first Saturday of every month during the school year? “Extraordinary ones,” answers Pamela B. Lacson, former program manager for Undergraduate Diversity at the Foster School, who managed the Young Executives of Color (YEOC) Program from 2008 through recruiting for the upcoming class of 2012. YEOC, established in 2006, is a nine-month college pipeline program focused on engaging high school students of color from public and private high schools throughout the Puget Sound area, providing college readiness instruction and focused sessions aimed at helping them to consider business as an academic and career choice. “Every single student has a story of inspiration and amazing leadership potential,” says Lacson, who tripled the number of students served by YEOC in just three years and played an integral role in securing a $75,000 grant from Ernst & Young to support the program in 2010. Given the goals of the program, Ernst & Young’s support is a perfect match. One of the company’s three corporate responsibility initiatives is education, specifically “increasing access to higher education, especially for disadvantaged and minority students, by helping to engage them in the learning process and by facilitating their understanding of how to finance education.” In addition to financial support, Ernst & Young helps to provide structured curriculum for the program and identifies high-caliber keynote speakers to motivate students at the Saturday sessions. Moreover, Ernst & Young leveraged its social capital to provide students with access to professionals and executives within the firm and its clients, to deliver thought leadership for various business topics. A majority of YEOC students will be among the first in their families to attend college, and the program gives them skills and tools to define their best opportunities. “We help them fill their decks with the best cards,” Lacson says. “Some of our students may not have even known that business could be a career choice until they learned about it here.” One student from Mariner High School credits YEOC with helping him identify his goals. “YEOC was awesome in helping me see that accounting is the career for me.” Once YEOC students learn about the choices, they develop skills and take the actions required to pursue their goals. And they do so in impressive numbers. Every YEOC senior in the class of 2011 is going on to college this year, 34 of them at the UW and
10 in the Foster School’s competitive Freshman Direct program. Other YEOC graduates have gone on to attend institutions around the country including the US Naval Academy, Duke, Morehouse, Wellesley and Notre Dame. Jai-Anana Elliott, associate director of diversity and recruitment for the Foster School’s Undergraduate Program Office, credits a few things with the program’s appeal and success. “Since the beginning, the huge benefit of being housed on campus has given these students a sense that this is a place where they belong,” says Elliott. “The introduction of a worldclass facility like PACCAR Hall has really added a wow factor.” Beyond the obvious benefits of being on campus is the deeper and more meaningful connection YEOC students make with their student mentors, highly qualified and carefully selected Foster School undergraduate students of color who represent a diversity of academic abilities, ethnic backgrounds and interests. “The biggest strength of the program is that it is delivered through the mentors,” says Elliott. “They are the voice of the program. They bring authenticity to the program so high school students of color see college students of color and recognize that they, too, can do this.” Last year, the mentor program came full circle when former YEOC student Yerusalem Yemane, a senior majoring in accounting, became a mentor to students in the 2010-2011 class. Yemane, president of the Association of Black Business Students, is also pursuing a Certificate in International Studies in Business (CISB) and a minor in Italian. She works two part-time jobs, as an accounting tutor at the UW instructional center and as an office assistant at the Foster School Undergraduate Program. She did an internship at Ernst & Young in Los Angeles this summer. “Yerusalem brings a tremendous energy to YEOC,” says Lacson, “and we are excited for her to shape the next generation of business leaders and continue to generate positive ripple effects in the community.” In the 2010-2011 academic year, 110 students were selected from more than 50 high schools to attend the program. There were 195 applicants for the upcoming year, 144 of whom will likely be selected to attend. n
YEOC Growth Demonstrates the program is fulfilling a need Year
# of students Notes
2006-2007
39
2007-2008
36
2008-2009
65
2009-2010 95 2010-2011
110
2011-2012
144
First year with UW Ernst & Young Partnership 195 applications received
fall 2011 15
Entreprenomic
Impact
The UW Business Plan Competition doesn’t just build better entrepreneurs; it launches successful companies into an economy that needs them
$92.7 million estimated revenues
for 2011 640 current employees $60+ million raised in venture capital
3 companies on the Inc. 500/5000 list 16 fo s t e r B USI N ESS
P
itch day at the annual UW Business Plan Competition is an elaborate courtship dance. Student entrepreneurs project infinite confidence to poker-faced judges, advertising ability and wisdom beyond their years. They illustrate the future success of their startups in gaudy PowerPoint charts—hockey-stick growth curves, gluttonous slices of billion-dollar markets, breakeven points just around the bend, and, always, happily-ever-after exits. Projections based on presumptions that test the border of optimism and delusion. If it all appears a touch irrationally exuberant, that’s kind of the point. Besides, some of these novice entrepreneurs and their maiden ventures actually do just fine in the real world. More than fine, in fact, according to a new survey by the Foster School’s Center for Innovation and Entrepreneurship (CIE). Since launching the Business Plan Competition in 1998, 891 teams and 2,768 students have participated, from across the University of Washington and many other schools across the state. CIE has awarded nearly $1.1 million in prize money/seed funding to 95 of those teams. And of 38 known to be still operating, 28 responded to the May 2011 CIE survey—15 consumer product/ retail, 5 technology, 4 life science and 4 clean-tech companies. They reported: • 640 current employees (220 earning $75,000+ per year) • $60+ million in venture capital (17 raised $250,000+ and 12 raised $500,000+; 8 companies bootstrapped by choice) • $92.7 million estimated revenues for 2011 (13 projecting more than $1 million) • 3 companies on the Inc. 500/5000 list (fastest growing private companies in the US) That’s hardly a picture you would expect to see from earlystage companies, much less early-stage companies founded by students. “Even we were surprised by the level of revenues, the number of jobs created and number of good-paying jobs,” says Connie Bourassa-Shaw, the eternally optimistic director of CIE. So what’s the secret? How does CIE turn a $1 million investment into $92 million in revenue and hundreds of living-wage jobs so quickly? Putting it into context
Egils Milbergs, director of Washington State’s Economic Development Commission, is bullish on innovation. It’s the ultimate and essential competitive advantage, he says. Lucky that the Seattle region is so rich in assets available to the aspiring entrepreneur: early stage investors; innovative anchor companies; a research powerhouse; a wide array of thriving industries; a deep pool of startup talent; supportive media and organizations; a culture that accepts—even admires—entrepreneurship. “But you need to get more granular,” Milbergs says. “What’s most important is the context of entrepreneurship. Putting together a business plan is great. But what matters is how those business plans get executed, financed, staffed and scaled.” For that, he lauds CIE and its ability to impart what he calls
“relationship capital.” It goes way beyond the competition. The center’s rich entrepreneurial ecosystem encompasses courses, certificate programs, lectures, matchmaking events and workshops. It’s energized by a massive network of judges, coaches and mentors—successful entrepreneurs and investors—who provide invaluable guidance. “A good infrastructure is incredibly important for early stage entrepreneurs,” says Bourassa-Shaw. “It begins at CIE, where we give them visibility, access, and the opportunity to fail without losing everything. “And it’s no small thing that so many of our alumni come back to mentor and judge. It’s that virtuous cycle that contributes greatly to the success of our students.” Take the money and run
There have been many successes. Giant Campus, the inaugural Business Plan Competition winner, has evolved from a network of summer technology camps to a leading provider of online education. Contour’s innovative wearable video camera has created an epic community of adventure athletes around the world, and earned it the number 7 spot on the 2011 Inc. 500/5000 list. Also making the list is Kotis Design (in 2011), a promotional apparel company, and Brass Media (in 2010), a media company helping young adults understand money. MicroGreen Polymers and Impel Neurosciences have received significant investment to bring their revolutionary recycling and drug delivery technologies to market. And NanoString, developer of innovative molecular diagnostics, is already there in a big way, employing 80. A somewhat more surprising success is Krochet Kids International. Co-founder and CEO Kohl Crecelius (BA 2008) entered the 2008 Business Plan Competition with a difficult-to-classify non-profit organization selling hats hand-crafted by impoverished women in Uganda. “We weren’t waiting for approval,” Crecelius says. “But we did leave the competition really encouraged, validated. I think we got more out of the Business Plan Competition than we ever realized at the time.” Three years later, the Krochet Kids brand has become a phenomenon. Its apparel is sold online and in athletic wear and Nordstrom stores nationwide, an ever expanding market that supports more than 100 beneficiaries and their families in Uganda, and another 10 stateside. Expansion to Peru began in August. Economic development is not a byproduct for Krochet Kids. It’s the entire point of the endeavor. “The more product we sell, the more people we can employ,” Crecelius says. “That’s the bottom line for us.” If at first you don’t succeed
The May survey provides only a glimpse of CIE’s economic impact. Many of the responding companies are just getting off the ground. And many more of the thousands of Business Plan Competition veterans are undoubtedly still out there, working on new startups, or bringing entrepreneurial energy to more established companies. “We have heard from the obvious ones,” Bourassa-Shaw says. “What is not as obvious—and what we are researching next—are fall 2011 17
View a video about the Business Plan Competition
the others who are on to their next company. Because there are many more of them.” Even as an incomplete measure of CIE’s imprint, the survey illustrates the power of its model, of equipping talented, ambitious young entrepreneurs with advanced skills and opportunity, and surrounding them with mentors who are the best in the business.
It demonstrates that the American Dream is very much alive and available… with a little help. “If these entrepreneurial successes are surprising, I’m looking for surprises like this,” Milbergs says. “Because they become inspirations and stories and models that show that you can take a risk and start a company and, guess what, you can actually succeed.” n
Here are just a few of the successful companies that started at the UW Business Plan Competition
Impel NeuroPharma
Krochet Kids International
Developing revolutionary delivery system of pharmaceutical drugs directly to the brain.
Markets hand-made hats and accessories, creating opportunity for impoverished communities in Uganda and Peru.
Founders – Michael Hite (MBA 2009), CEO; John Hoekman (PhD 2009, pharmaceutics), chief scientific officer
Co-Founder – Kohl Crecelius (BA 2008), CEO
BPC 2008 – Grand Prize, Best Technology Prize
BPC 2008 – Best Non-Profit/Socially Responsible Prize
Licensed core device technology from the UW Center for Commercialization in 2009.
Selling apparel online and via Nordstrom stores and a network of outdoor and fashion retailers nationwide.
Awarded $500,000 grant from National Institute of Mental Health to research potential solutions to AIDS-related dementia (neuroAIDS). Raised over $2.1 million in private and public funding from some of the Northwest’s most well-known life science angel investors.
Trains and employs more than 100 women and several project managers in Northern Uganda, providing food, water, clothing and education for them and their families.
Collaborating with UW researchers on a Life Science Discovery Fund Commercialization Grant to fund its first in-human clinical trial studying acute pain.
Employs 10 in the US headquarters
Recently awarded $750,000 grant from Department of Defense for additional product research.
MicroGREEN Polymers
Expanding to Peru in 2011
Recycles plastic bottles, using an innovative process, into lightweight, insulating, inexpensive thermoformed products, including recyclable printing, packaging and construction materials.
Intends to double the number of full-time employees in 2012 and employ approximately 20 people by 2014.
Kotis Design
Co-Founder – Krishna Nadella (PhD 2009, mechanical engineering), chief technology officer
Screen printer, promotional product peddler, graphic design firm, warehouse/ fulfillment center and—most of all—brand evangelist.
BPC 2003 – Second Prize; Best Technology Idea prize
Co-Founder – Jeff Becker (BA 2003), CEO
Runner-up for the Wall Street Journal’s 2010 Technology Innovation of the Year award.
BPC 2002, 2003 – Sweet 16
Received the 2010 Washington Manufacturing Innovation of the Year award.
Named to Puget Sound Business Journal list of 100 Fastest Growing Private Companies in Washington for third year running (ranked #53 in 2010).
Raised more than $9 million in funding from Waste Management, WRF Capital and others.
Made 2011 Inc. 500/5000 list of fastest growing US companies for three-year sustained growth rate of more than 120 percent.
Operating pilot production facility in Arlington, WA, with capacity to recycle 16 million pounds of plastics.
Employs 46
Employs 32
18 fo s t e r B USI N ESS
Giant Campus
Contour Accredited online school that offers curriculum in technology, science, engineering and business innovation.
Fun and easy way to create shareable video stories of adventure lifestyles, enabling people to capture the action, edit into a story and connect with friends online.
Founder – Pete Findley (BA 1998), CEO
Founders – Marc Barros (BA 2003), CEO; Jason Green (BA 2003), executive producer
BPC 1998 – Grand Prize Initially built a nationwide network of technology summer camps.
BPC 2003 – Third Prize; Best Consumer Product prize
Provides technology instruction to military and their families through Department of Defense contracts.
Selling products via Amazon.com, REI and outdoor retailers in more than 40 countries worldwide.
Offers online education at no charge to middle and high school students in several states through state-funded programs and contracts.
Ranked #7 in the 2011 Inc. 500/5000 list of fastest growing US companies; ranked #1 in the Consumer Products & Services category.
Offers same curriculum on tuition basis to students around the world who lack local access to curriculum.
Winner of design and innovation awards from CES, Red Dot, BusinessWeek, Time, Men’s Journal, Men’s Health and Outside.
The leading provider of career prep, technology and business course content for online schools and programs nationwide.
Raised $5 million in growth financing from Montlake Capital and Black Oak Capital Partners.
Employs 65
Revenue growth of 1556 percent over the past three years. Employs 50+
Epic Seats Brokers premium, hard-to-find and value-oriented ticket locations to major concert, sporting and theatrical events throughout North America.
Red Lantern Journeys Arranges cultural tours and adventure travel packages in Asia for independent travelers and small groups. Founder – Ambrose Bittner (MBA 2004)
Co-Founders – Scott Barrows (BA 2000), VP of sales; James Kimmel (MBA 2006), VP of operations BPC 2005 – Sweet 16 Compete successfully in extremely crowded market by focusing on extraordinary customer service and operational innovations.
BPC 2004 – Best Idea in Service/Retail Built business on founder’s extensive experience living and traveling in Asia. Specializes in India, China, Thailand, Vietnam, Cambodia, Bali, Nepal, Laos, Myanmar, Mongolia, Bhutan and Tibet.
Employs 12
Committed to responsible travel.
NanoString Technologies
Board member of the Mitrata-Nepal Foundation for Children; leads annual charity climb on Mt. Rainier to raise money for an orphanage and school in Kathmandu.
Barcodes individual molecules in a biological sample so they can be tracked, characterized and counted for scientific discovery. Co-Founder – Amber Ratcliffe (MBA 2003)
Developer of casual games for personal computers, consoles and mobile devices.
BPC 2003 – Grand Prize; Best HighGrowth Idea
Co-Founder – Chris Natsuume (MBA 2007), creative director
Used Business Plan Competition as motivation to launch molecular tracking company with original partners Aaron Coe (MBA 2003) and inventor Krassen Dimitrov. Raised $47 million in venture capital financing from Clarus Ventures, OVP Venture Partners and Draper Fisher Jurvetson. Developed exclusive technology into the nCounter Analysis System and began international sales in 2008. Employs 80
Boomzap
BPC 2007 – Sweet 16 Released over a dozen games to date, most notably blockbuster successes in Awakening: The Dreamless Castle, Death at Fairing Point, Antique Road Trip: USA, and Pirates Plund-Arrr. Games developed in 11 languages. Innovative use of virtual office, allowing developers to live and work anywhere in the world. Employs 44 (in Singapore, Japan, Malaysia, Indonesia, Philippines, Russia and Georgia) fall 2011 19
faculty
Market Knows Best
The financial markets—and the investors who populate them—seem to hang on each announcement of key macroeconomic indicators. Unemployment. Industrial production. Gross domestic product. A calendar full of cues to buy or sell. But most initial reports of macroeconomic data are highly inaccurate. They undergo significant revisions in the months and sometimes years after their initial release, being ultimately adjusted by as much as 200 percent, according to new research by Thomas Gilbert, an associate professor of finance at the Foster School. Importantly, if the initial reports are inaccurate, Gilbert’s study reveals that the market knows the true score. “Hundreds of thousands of investors comprise the market,” he says. “And each holds some piece of information about the economy—employment, consumption, production—at a given time. These distributed pieces of information get aggregated into prices in reaction to the day’s macroeconomic announcement, which itself is usually inaccurate.” The market’s response is related not to the initial release, but rather to its final revision.
20 fo s t e r B USI N ESS
“By aggregating all the dispersed information of the economy,” Gilbert adds, “the markets can forecast the future revisions of this macroeconomic data.”
Chalk it up to the power of aggregation, millions of independent investors contributing their personal perspecThomas Gilbert tive and knowledge of the economy to a prescient market.
Predictive in any economy
The market’s efficiency
Gilbert analyzed the daily returns of the S&P 500 Index following the announcements of key macroeconomic reports over the past 25 years. He focused on three major indicators that undergo significant revisions: the monthly releases of nonfarm payroll and industrial production, and the quarterly release of GDP. What emerged was an empirical relation between announcement day returns and the content of eventual revisions. This link differs across the business cycle, Gilbert finds. Announcement day stock returns and future revisions are positively related in expansions and negatively related in recessions. But in either economic climate, the returns are predictive. The financial impact of this revisionist trading can be dramatic. For instance, Gilbert calculated that an eventual singlemonth revision of 100,000 jobs in the employment report is equivalent to an average announcement-day change in the S&P 500 Index’s market value of $10 billion during an expansion and $43 billion during a recession. To put this in perspective, the average error in the monthly jobs report is 250,000 people. During a recession that could mean an announcement-day swing in the S&P 500 Index’s market value in excess of $100 billion.
The influential “efficient-market hypothesis,” which asserts that share prices always incorporate and reflect all relevant information, took a beating during the global financial crisis. But Gilbert sees his latest findings as evidence of the hypothesis in action, at least in the market’s rational response to inaccurate macroeconomic announcements. “This result is in strong support of market efficiency,” he says. “The market is capable of aggregating accurate information about the overall economy that no individual person or organization can know at a given time. A lot of people hold small pieces, but only the market knows the whole.” In this case, the market knows best. So what, then, is the point of collecting macroeconomic data, at great expense, and releasing it in the endless cycle of economic reports? Gilbert describes each announcement as a catalyst for the truth to emerge, expressed in the dispassionate form of market prices. “There is value in incorrect information,” he says. “The release forces a crystallization of this dispersed knowledge of the economy that only the market can aggregate. Without the announcements, there wouldn’t be an event that forces the market to form this aggregate opinion.” “Information Aggregation Around Macroeconomic Announcements: Revisions Matter,” is published in the July 2011 issue of the Journal of Financial Economics. n
© iStockphoto.com / zorani
Economic indicators are inaccurate, but investors, collectively, know the truth
Socratic Methodist Lance Young wins 2011 PACCAR Award for Excellence in Teaching by asking the right questions or more from each other than from me.” Award winning
Lance Young works a classroom like a
Socratic talk show host. Averse to lecturing, the assistant professor of finance instead conducts his MBA entrepreneurial finance course by relentless inquiry. He obliges his students to come prepared, then calls them at random to present, expound or opine on the day’s case study topic. His students actually “teach” the class, Young says. He is merely a shepherd—a financially expert, appealingly rakish shepherd—nudging along the discussion until every last lightbulb is blazing. In doing so, hour by hour, he summons from his students a wealth of leadership, presentation and critical thinking skills. And he empowers them to apply the principles of finance to the very real—and often ambiguous—world of entrepreneurs and investors. “It’s certainly not an efficient way of running a class,” Young admits. “But it’s incredibly effective. When all of the students are engaged and contributing, a tremendous amount of learning can happen—as much
This decentralized method has turned Young’s technical, demanding elective into a de facto requirement for the throngs of entrepreneurial students at the Foster School and throughout the UW. And it has earned Young the 2011 PACCAR Award for Excellence in Teaching, selected annually by a panel of MBA students. The Foster School’s highest teaching honor was established in 1998 by PACCAR Inc, a Fortune 200 global technology company based in Bellevue, Washington. PACCAR and its founding Pigott family are longtime supporters of the Foster School. “Lance consistently challenges and engages students in class with his no-nonsense style of teaching,” wrote one student in nominating Young for the PACCAR Award. “He wants every student to have a good grasp of his material, and will not give up until everyone understands.” And another: “The intensity level that Lance brings to the classroom is extremely motivating. It is classes such as his that help make the Foster MBA experience lifechanging.” Learning from the best
It’s an experience Young knows firsthand. After graduating with highest honors from Washington State University, he earned his MBA at the Foster School. He received an MS in applied statistics and a PhD in
finance at the University of Rochester before joining the Foster School faculty in 2003. A Neal and Jan Dempsey Faculty Fellow, Young’s research in empirical asset pricing, behavioral finance, and capital market anomalies has won numerous awards, including the 2009 Fama-DFA Prize. But at the Foster School he’s best known as an electrifying presence in the classroom. Young has won professor-of-the-year distinction in the school’s Undergraduate, Full-time MBA and Evening MBA Programs. And now the PACCAR Award. For his part, Young credits his success in the classroom to his mentors and inspirations, many of whom are past winners of the PACCAR Award. “When I was an MBA at Foster, I studied under Rocky Higgins, Karma Hadjimichalakis, Ali Tarhouni, Steve Sefcik. Their courses changed the way I thought and got me very excited about finance and economics, and had a tremendous impact on my life,” he says. “It’s been an honor just to serve on the same faculty with them. But to be recognized among this elite group, and alongside all the other outstanding recipients, is humbling, gratifying, exhilarating. Winning the PACCAR Award is a great honor, and it makes me want to do better.” Previous PACCAR Award Winners Karma Hadjimichalakis (1998) Stephan Sefcik (1999) Elizabeth Stearns (2000) Jennifer Koski (2001) Ali Tarhouni (2002) Robert Higgins (2003) Jane Kennedy (2004) Daniel Turner (2005) Mark Forehand (2006) Mark Hillier (2007) Jennifer Koski (2008) Shailendra Pratap Jain (2009) Thomas Gilbert (2010) n Fall 2011 21
faculty Distinguished Teaching Christina Fong’s dynamic classroom style comes straight from the literature
The students in Christina Fong’s Management 300 class are throwing paper airplanes. But this is no puerile insurrection. The frenetic clusters of Foster School undergrads are quality testing the hand-folded products of their make-believe aerospace companies, formed just moments before. Only those planes that pass the test—that is to say, land inside a target outlined in blue tape—will earn a profit. Misses cost dearly on the balance sheet. And the most profitable team wins. Bragging rights, however, aren’t the point of this deceptively complex exercise. Fong has teamed her students by personality type, self-identified by a prior assessment. For the extroverts, introverts, creatives and traditionals alike, the real takeaway is an intimate understanding of how personality impacts organizational behavior. That, and a roaring good time. Fong’s required course in managing for organizational effectiveness mixes business
22 fo s t e r B USI N ESS
with pleasure. It’s packed with simulations that engage every student and stamp an indelible punctuation on each session’s topic. To learn team innovation first-hand, Fong’s students compete to erect the tallest freestanding marshmallow tower constructed of uncooked spaghetti, tape and string. To experience a “deep dive” prototyping session, they brainstorm the perfect smart-phone app for UW students. To try their hands at decision making in ambiguous situations, they manage a race car team and opt in or out of an event. To comprehend the importance of communication and delegation in a multifaceted task, they try to duplicate Lego men from a model at the head of the class. “I believe the only way to learn how to lead is to lead,” says Fong, an assistant professor of management at Foster. “So in every one of my class sessions, my students are up out of their seats, engaging in the skills—teamwork, leadership, influence, negotiation, decision making—that are going to help them in their careers.” Data driven
This relentless philosophy of active learning comes straight out of Fong’s influential early research on the limitations of traditional management education. While earning her doctorate at Stanford in the early 2000s she co-authored the award-winning paper, “The End of Business Schools? Less Success than Meets the Eye.” This work has pushed management schools around the country to refocus their curricula on theory and skills that are more relevant to business leaders, including decision making, ethics and integrative thinking. It also has challenged management education to measure itself by the same exacting standards that management research undergoes. Otherwise, it’s just voodoo economics in the classroom. “We need to bring the same meth-
odological rigor and use of empirics into our examination of teaching,” Fong says. “Are we preparing students for long-term success as managers and leaders? Can we test whether we’re actually improving our students’ lives?” To ensure that she is doing so, Fong starts with well-documented methods of experiential learning. The simulations and other digestible examples allow her to lead students deep into research and theory so that they emerge with knowledge and, more importantly, a sense of relevance. Method worth measuring
It seems to be working. Since arriving at the Foster School in 2003, Fong has earned rave reviews teaching core management to undergrads, MBAs and global MBAs. This year she received the UW Distinguished Teaching Award. “Many MBAs are skeptical of the softer disciplines like organizational behavior,” says Megan Black-Weiss (MBA 2010). “But Christina makes the value of her course hard to argue. Through hands-on learning, an unrivaled commitment to her students, and her no-nonsense approach to the classroom, Christina taught concepts that I use every day.” Xiao-Ping Chen, chair of the Foster School’s department of management and organization, sees the magic behind Fong’s teaching in the preparation that comes before. “Christina takes her teaching very seriously and works very hard to design a course that is engaging, educating, and meaningful for students’ life in and outside of the classroom,” Chen says. “Her class is rigorous, challenging, but also fun.” Learning disguised as fun? That’s a concept worth studying. n
Quantum Accountant Zoe-Vonna Palmrose seeks to reconcile the profession’s modern complexities with its elemental foundation
If it is possible to be enchanted by an equation, then count Zoe-Vonna Palmrose (MBA 1978, PhD 1982) enchanted by the fundamental axiom of double-entry accounting. Debits equal credits. An elemental expression of life in balance. “When I was introduced to the accounting equation in my first accounting course, I thought it was the most elegant, wonderful thing I’d ever seen,” says the Foster School’s new Hansen Professor in Business Administration. “And I’ve spent my life trying to understand it—which has turned out to be an exciting intellectual adventure.” Palmrose, who comes to the Foster School by way of UC-Berkeley and USC, has written on the foundations of accounting and its shared provenance with the natural sciences. In 2005 she collaborated with former Microsoft CFO and Nasdaq chair Mike Brown (BA 1969) on “Thog’s Guide to Quantum Economics: 50,000 Years of Accounting Basics for the Future,” a work of “scientific fiction” that follows an immortal family of huntergatherer-bookkeepers through the ages as they invent arithmetic and writing, and sensibly adapt their recordkeeping to simplify the complexity of their increasingly modern economic lives. But Palmrose is also very much planted in the real world, working on public policy
issues to improve the state of accounting and auditing. She’s concerned that accounting standard-setters have taken a wrong turn from the profession’s transaction-based tradition to market-value accounting, a direction that raises issues about the complexity of financial reporting, the auditability of Generally Accepted Accounting Principles (GAAP), and disclosure overload. “GAAP used to emerge from the bottom up, out of practice,” she says. “But now it has become a very top-down process.” Unlike most of her fellow CPAs, Palmrose is in a position to do something about it. Serving as Deputy Chief Accountant for Professional Practice at the Securities and Exchange Commission (SEC) from 2006-08, she worked to improve audit quality, manage the SEC’s oversight of the Public Company Accounting Oversight Board, and help rationalize the Sarbanes-Oxley Act’s “Section 404” process for reporting on the effectiveness of internal controls over financial reporting. Palmrose previously served on the Public Oversight Board’s Panel on Audit Effectiveness, the Auditing Standards Board Fraud Task Force, and as vice-president for research at the American Accounting Association, which has twice awarded her its Wildman Medal. In 2008, Treasury and Risk Magazine named her one of the 100 most influential people in finance. These days Palmrose is focused on issues related to the quality of financial reporting and auditing, including restatements, regulation, and audit litigation. She will teach financial statement analysis at the Foster School, where her journey began. “My first PhD seminar was taught by (current dean) Jim Jiambalvo, in his first course at Foster, too,” Palmrose says. “It’s wonderful to be back home.” n
Plus Six Foster School faculty welcomes Zoe-Vonna Palmrose and the following five
Nidhi Agrawal Marketing and International Business Associate Professor of Marketing, Northwestern University Kellogg School of Management, 2006-2011 James R. McManus Research Chair PhD (marketing), New York University, 2006 Expertise: marketing, consumer psychology, consumer information
Jonathan Brogaard Finance PhD (finance), Northwestern University Kellogg School of Management, 2011 JD (corporate and tax law), Northwestern University School of Law, 2011 Expertise: High-frequency trading, law and finance, financial regulation, investments, taxation of financial products
Ryan Fehr Management & Organization PhD (organizational psychology), University of Maryland, 2010 Expertise: conflict management, creativity and innovation, cross-cultural management
Oliver Rutz Marketing & International Business Assistant Professor of Marketing, Yale School of Management, 2007-2011 PhD (marketing), UCLA Anderson School of Management, 2007 McKinsey & Company, senior associate 1999-2003 Expertise: Internet and e-commerce, paid search advertising, banner advertising, clickstream analysis, ad copy and landing page design
Elizabeth Umphress Management & Organization Associate Professor of Management, Texas A&M University, 2003-2011 PhD (OB, psychology, sociology), Tulane University A.B. Freeman School of Business, 2003 Expertise: ethical decision making, organizational justice, diversity, social dominance theory
Fall 2011 23
faculty RESEARCH BRIEFS Pirates or Patrons?
The Right Stuff
Good Fit, Bad Fit
Private equity creates long-term value
Intellectual Property + same-industry entrepreneurial experience vital to high-tech startups
Support of brand extensions depends on one’s philosophy of change
“The Buyout of America,” a bestselling 2009 book, paints a grim picture of private equity firms running amok in the US economy, snapping up vulnerable companies and either pillaging every last crumb of value or making a killing off a quick-flip sale. But is private equity really rife with high-finance larceny? Not in the mainstream, according to a study by Jarrad Harford and Adam Kolasinski of the Foster School’s department of finance. Their exhaustive analysis of nearly 800 leveraged buyouts that took place between 1993 and 2001 reveals that private equity firms, on average, actually add long-term value to the companies they purchase.
The sample companies operated by private equity groups, post buyout, exhibit a return on assets that is higher than those in a control group and tend to avoid overinvestment. And the notorious private equity practice of extracting capital through special dividends that leave the target firm in distress—much maligned in the media—is rarely seen. “There are always going to be some bad apples resulting in some scary cautionary tales,” says Harford. “But on the whole, the industry is creating value.” n
24 fo s t e r B USI N ESS
Intellectual property. Prior experience. Good things for budding high-tech firms? Not always, according to a study by Sonali Shah, an assistant professor of management at the Foster School. Tracking 700 high-tech firms, founded in 2004, during the critical first five years of life, Shah found that intellectual property (IP) protection enhances a high-tech startup’s chances of survival only when combined with a certain type of founder experience. Having IP and prior entrepreneurial experience in a different industry does not enhance the chances of firm survival. Having IP and prior employment experience in the same industry also does not enhance the chances of firm survival. But having IP and prior entrepreneurial experience in the same industry dramatically enhances the likelihood of firm survival. “The results suggest that it’s not the IP alone that matters, but the ability to use that IP effectively,” Shah says. “Knowledge of how to operate as a startup in a particular industry is needed to derive the benefit from technological knowledge.” The paper, “Intellectual Property, Prior Knowledge and the Survival of New Firms,” won the 2011 Kauffman Foundation Survey Promising Paper Award. n
Would you like to see Nike concoct a sports drink? How about Apple selling shoes? Hypothetical scenarios—but established brands extend their core offerings all the time in logical and less logical ways. Whether or not you view a brand extension favorably can come down to, strangely enough, your stance on the age-old philosophical debate between nature and nurture, fate and free will. A series of new studies co-authored by Shailendra Pratap Jain, a professor of marketing at the Foster School, pares consumers into two psychological segments. Consumers who believe that people are not capable of change tend to support an extension that is a good fit with the parent brand (a Nike Just Drink It beverage, for instance). Consumers who believe we are capable of change tend to support an extension that is a poor fit with its parent (such as an iShoe). “Supporters of poor-fit extensions like the idea of a brand extending itself beyond its comfort zone. They reward the effort,” Jain explains. “Supporters of good-fit extensions reject poor-fit extensions as wasted effort.” He notes that while poor-fit extensions are mostly rejected in the US, they often launch successfully in many other parts of the world. n
The Delaware Deal
Not-So-Secret Sauce
Age of Reason
Incorporation in the businessfriendly state can cut a company’s state tax burden significantly
Corporate knowledge spillovers can benefit the innovator over the imitator
Advertisers should take care when trying to manipulate self-perception
© iStockphoto.com / DamirK, alengo, picha, pixhook, SaulHerrara, TommL, nuno
Delaware is, as they say, winning. Sixty percent of American parent companies—and thousands of subsidiaries—incorporate in the tiny state thanks to its business-friendly legal system and tax structure. But just how favorable is the tax break? Incorporating in Delaware cuts a firm’s state tax burden by 40 percent, on average, according to a new study of domestic firms by Jacob Thornock, an assistant professor of accounting at the Foster School. “By incorporating in Delaware, you can reduce your state effective tax rate by two percentage points, from five to three,” Thornock says. “If you add that up over our sample, it’s around $60 billion dollars. That’s a lot of money saved.”
But Thornock adds that Delaware’s tax advantage is diminishing. As other states offer more competitive tax structures or prohibit out-of-state tax strategies, the corporate money is increasingly staying in the state in which it is made. n
Knowledge spillovers—from patent purchase, corporate piracy, intellectual property theft, employee mobility, reverse engineering, even plain old imitation (the sincerest form of flattery)—are generally considered bad for business. The originating firm’s business, that is. But they don’t have to be. A new study co-authored by Kevin Steensma, a professor of management at the Foster School, finds that a company can learn vicariously from competitors that exploit its intellectual property. When recipient firms connect the originating firm’s knowledge with other knowledge in the market, no one is in a better position to exploit these new insights than the originating firm. And the larger the pool of spillover knowledge, the greater the potential benefit to the originating firm in terms of subsequent innovation. “Spillovers are going to happen. You can never completely control intellectual property,” Steensma says. “So firms would do well to set up systems to monitor the way other firms are using their technology. In some ways, it can be like outsourcing the R&D of your original ideas.” n
Advertisers are forever trying to manipulate the way we perceive ourselves. Age is a prime target. Ads for body wash try to convince young teens that they are desirable young adults. Ads for sports cars try to convince 50-somethings that they are desirable younger men.
But a new study by Mark Forehand, a professor of marketing at the Foster School, demonstrates that such maneuvers must be executed with precision to achieve the desired effect. Forehand measured how strongly college students associate the concept of youth with self after viewing a series of related advertisements. When the students viewed ads featuring moderately older subjects (30-somethings), they felt older (an assimilation response to the imagery). When they viewed ads featuring significantly older subjects (senior citizens), they felt younger (a contrast response). This effect is not automatic, Forehand adds. It gets stronger the more intently a person processes whether an ad is aimed at him or her. “User imagery can predispose people to liking your product,” he says. “Ironically, exposing young consumers to senior citizens could increase their propensity to choose youth-related products.” n
Fall 2011 25
alumni
Mobile Man Legendary deal-maker Wayne Perry delivers freedom of wireless communications to the masses Among his ten-point “Heretics Guide to Corporate Leadership,” delivered at a Foster School event a few years ago, Wayne Perry (BA 1972) offered this unexpected nugget of advice: “Don’t hire somebody like me to run your company.” Good joke, that. Especially coming from a genuine founding father of wireless telecommunications, whose legendary deal-making at the seminal McCaw Cellular helped create a $200+ billion industry, turning a sci-fi technology into a ubiquitous device of personal empowerment. “When I began doing deals at McCaw,” Perry explained, all kidding aside, “my wife and I lived in a $32,000 bungalow and I drove a diesel VW Rabbit. Now I have a house on Lake Washington and fly my own
26 fo s t e r B USI N ESS
jet. How hard am I going to work for you?” Straight-shooting advice from a man looking back on a storied career, yes. But also a glimpse into Perry’s younger self, some three decades back, endowed with raw ambition, steely nerve, a shrewd mind and the critical vision to foresee the value of a revolutionary technology ahead of everyone else. Everyone, that is, but Craig McCaw. Perry first met the wireless pioneer in 1976, while working as an associate at a Seattle law firm, shortly after studying finance at the Foster School and law at NYU. He helped McCaw make his first cable TV acquisition and soon joined him as general counsel and, in the company’s heyday, president.
Cellular sunrise
McCaw Communications grew into a regional cable player before hitting the ceiling against the big boys in the early 1980s. But then this new mobile phone technology looked promising. “We plugged the wireless numbers into our cable growth model and thought we must have an error,” Perry says. “It was that good.” When the FCC opened filing for cellular licenses in the nation’s 30 largest markets
in June 1982, Perry and McCaw applied for six cities, cleaning out the cupboards and flashing soft letters from banks to demonstrate the ability to build systems. The company was awarded all six. Now the race was on. A wireless land grab ensued. As licenses were issued for progressively smaller markets, increasing throngs of applicants flooded in, eventually forcing the FCC to employ a lottery. Market after market, Perry scraped up financing to buy out the competition. “Early on it was very difficult to convince capital markets to give us the money,” Perry says. “They would say, ‘How many people are going to use cell phones? There are only so many investment bankers in the world.’ “We had to make them appreciate that all of us wanted to be untethered.” So Perry turned to the anecdotal. To serve as proxy for, well, everybody, he used a funeral director, a teacher—or the proprietor of a tree cutting service, depicted in an early presentation slide sitting atop the hood of his dusty pickup making a call on a clunky early portable. One picture worth a thousand stats. Risky business
Buying up licenses and the front-loaded business of building cellular systems were not for the faint of heart. “The consumption of capital was voracious,” Perry says. “I can’t even calculate the number of bet-the-company moves that we made at McCaw. “It was an incredibly good industry, though, we knew that. We had tight management, documentation and systems in place. And we believed that, ultimately, capital would flow to good ideas.” It did flow to Perry and McCaw, eventually, torrents of equity of debt. But Perry wasn’t only empowering a force of talented young guns, financed by junk bonds, to make million-dollar acquisitions on the spot (“We were the Visigoths,” he recalls, “especially to those white-shoe companies”). He also was operating an exponentially growing company that was building systems and serving customers across America. It required a management structure of “amazing decentralization but brutal accountability,” as Perry terms it.
By the time McCaw Cellular went public in 1986, it had quietly become the industry’s largest by number of customers. But the dream of a nationwide network would require more than incremental growth now. It called for heavy dealing. Perry engineered the purchase of MCI in 1986 and LIN Broadcasting in 1989, giving McCaw access to the treasured New York and Los Angeles markets and most others across the country. The biggest deal
The company had to take on onerous amounts of debt to get that last mile. But a decade of unblinking acquisitions and mitigated risks set the stage for the biggest deal of all. When the FCC first licensed cellular spectrum, the telecommunications giant AT&T had passed, projecting only one million customers domestically by the year 2000. By 1993, the industry had already reached 16 million (on the way to 100 million by century’s end and 300+ million today). And the company that invented cellular technology—at Bell Labs in the 1940s—was desperate to get in the game. Now there was only one option. And it would cost. Perry and McCaw negotiated a merger with the telecom leviathan for $11.5 billion plus $5 billion in assumed debt, at the time the second-largest in US history. “The hardest decision we ever had to make,” recalls Perry. “McCaw was like Disneyland. People loved working there. But once you’ve recognized all the possible returns you’re going to give investors, holding on is either ego or delusion. “All of our employees made out pretty well. Many became millionaires.” Perry stayed on the AT&T board for a few years to look after the merger. He did some deals and handled auctions for the new AT&T Wireless. But soon he was ready to return to something a bit more entrepreneurial. Return to go
One of McCaw’s follow-up companies, NextLink, fit the bill. As CEO of the nascent wireless access services provider, Perry dove into financing and acquisitions, just like the good old days. Before long, he had built a $15 billion market cap. “I woke up one day and I was CEO of this big company and
my schedule said things like, ‘Wednesday morning address sales team in Miami,’ and ‘Tuesday attend grand opening of switch in Houston,’” he says. “I realized that I’m a deal guy; it was time to bring in an operator.” In 1999 Perry founded Edge Wireless, a provider of AT&T Wireless roaming service in rural niche markets of the western US, including Sun Valley, ID, and Jackson Hole, WY. He navigated this far-flung company to $150 million in annual revenues before selling to AT&T in 2008. In one final stroke of brilliant telecom negotiation, Perry presented his roaming parent company the eye-opening image of a billboard in Jackson Hole, where all of AT&T’s top brass just happened to own vacation homes. “T-Mobile welcomes AT&T customers!” it proclaimed. The what-if scenario proved too embarrassing. AT&T took the deal. To infinity and beyond
Perry looks back on the wireless industry’s past with great pride and forward with unwavering optimism. The expanding freedom of information and communication; the proliferation of smart sensors to better manage everyday life. “People have shown an enormous appetite for information at their fingertips at all times,” he says. “You can’t put that genie back in the bottle.” These days, he’s enjoying his family and the spoils of launching an industry, in his case a collection of classic motorcycles and the gleaming jet airplane he pilots around the globe. He’s also a minority owner and board member of the Seattle Mariners, and is the president-elect of the Boy Scouts of America. And while he’s not exactly on the job market anymore, Perry is still doing deals. His current concern is a research facility he’s developing in Richland, WA, to incubate green technologies that he expects will spin out from the Pacific Northwest National Laboratory. Laying his bets on the next breakthrough industry before the crowds arrive. Again. “I don’t believe there was a golden age of business,” Perry says. “I think the golden age is tomorrow. There are still incredible opportunities out there.” n Fall 2011 27
alumni
The Business of Doing Good Saara Romu’s eclectic experience and expertise powers the Bill & Melinda Gates Foundation Found a vocation
There was no moment of enlightenment. No road-to-Damascus conversion. No lifealtering episode in the hinterlands of the developing world. Saara Romu (MBA 2007) was simply born with a fundamental belief that every human life is equally precious. So it comes as no surprise that, a few years removed from her Foster MBA, Romu is working for the Bill & Melinda Gates Foundation, one of the world’s foremost engines of economic, educational and medical equity. A portfolio manager in the foundation’s Global Health group, specializing in infectious diseases, Romu manages significant grant dollars, supports the strategy needs of internal teams and advises grantees on budgets and business plans so they can focus on the science. This is critically important given the foundation’s entrepreneurial approach to philanthropy. Think investment rather than hand out. “You don’t just get a blank check from the Gates Foundation. You’re expected to reach benchmarks and there is constant monitoring of progress toward measurable outcomes,” she says. “I’m there to help with this.”
28 fo s t e r B USI N ESS
Built a portfolio
Romu took a circuitous route to the Gates Foundation, which may be the only feasible preparation for the expansive parameters of her job. She studied biology at Queens University in her native Canada and did laboratory work at Notre Dame before moving to Vancouver to manage the bioinformatics program of a national genetics research consortium. “At that point I realized that I had good science and management skills,” Romu says. “But I needed to hone my finance skills. I needed an MBA.” She came to the Foster School with a particular—some might say peculiar—intention. But she soon found she was in the right place to custom-tailor her experience. Romu entered the UW Business Plan Competition one year and co-chaired the next. She served in student government and as an officer in the Biotech Club, led an MBA study tour, worked with the Forestry Department to analyze the pulp and paper industry, interned at Scotia Capital, served as a Leadership Fellow, even met her husband, Avniel Dravid (MBA 2007). After graduation she lived for a time in India, and rounded out her financial education with a job in commercial banking with Dexia Group.
Romu’s career peregrinations, and the resulting skills and experiences, have become essential to her work at the Gates Foundation. “The majority of positions here are deep subject matter experts—MD/PhDs with 20 years field experience in The Gambia, for instance,” she says. “But mine is a pretty unique position that really cuts across the foundation.” She’s a perfect fit. And she knows the Gates Foundation is a special place. Not because of the gleaming new headquarters or the occasional visit from Bono and other VIPs, but because of the work, its impact. Romu recently traveled to Bihar, a poverty stricken corner of rural India, where the Gates Foundation is supporting innovative work on a neglected disease called visceral leishmaniasis (AKA black fever), the second-worst parasitic killer in the world. Flying home she sat next to an Indian MD and mentioned she was working on the project. “He said, ‘Really, why would you do that? Those people don’t matter,’” she recalls. “I thought, that’s why I’m doing it.” No revelation, perhaps. But plenty of affirmation. Says Romu: “It’s amazing to come to work every day and know that what you’re doing could eventually lead to children’s lives being saved.” Localizing Global Health
Under Saara Romu’s guidance, the Foster School recently launched a pilot program with the Gates Foundation exposing students and faculty to the most pressing issues in global health. Two MBAs, working with Foster faculty Ed Rice and Mark Hillier, are developing cost-efficiency strategies for preventing the spread of malaria and building a database of worldwide vaccine R&D. n
Local Hero Groupon CFO Jason Child is also a dreamer, music fan and local business advocate
Forbes deems Groupon “the fastestgrowing company ever.” What’s it like to be a leader in that environment? Jason Child (BA 1991), Groupon chief financial officer, has witnessed epic growth at this startup since joining in December 2010. Staff doubled. International business expanded exponentially. A leadership team formed. And Groupon is preparing to go public. “The pace of change is extreme.” He and other Groupon leaders are learning to jell all while creating “the necessary infrastructure to build a multi-billion dollar operation,” says Child. No stranger to dot-com intensity, Child worked at Amazon for 12 years in all areas of finance, most recently as VP/CFO of Amazon International. And his Foster School experience 20 years ago boosted his natural aptitude for driving change. Comparing the UW to private schools, he says, “I felt like it was a better preparation for life. You have a vast amount of resources and you just need to tap into it.” Success, he says, comes from tackling challenges head-on.
Child hit the ground running at Groupon. “When I came on the financial team was basically an accounting team.” They didn’t have tax, treasury, financial planning and analysis, strategic planning, investor relations or business development. “All that stuff we’ve had to build in the last seven months. While I see the IPO as a big project, there have been other projects at least as big.” Groupon offers daily deals—via email or smart-phone apps—that drive demand to local businesses. Coupons are for things like trapeze classes, restaurants, travel getaways, even local events. They offer unique, quirky content (Child often laughs out loud at the “funny, even strange” copy), deep discounts and a go-local experience. Child attributes that combination to their epic success. “We pride ourselves in getting people off their couches and into their local community.” Tens of millions of subscribers worldwide is a lot of local activity. “If you look at the global retail, leisure, recreation and food services market, it’s a $17 trillion market.” Google and Amazon have even jumped in.
Child was enticed to join Groupon because he was ready for change, inspired by Groupon CEO Andrew Mason, and saw “social e-commerce” as the next big business opportunity. He feels Mason matches the energy, enthusiasm and vision Jeff Bezos had in 1999 when first launching Amazon. “There are a lot of similarities between the companies in terms of having a very big, bold vision and having a very big, bold, yet competitive, yet very significant, opportunity. “I loved working at Amazon,” says Child. “The one challenge I sometimes felt was Amazon was extremely efficient. It’s so efficient that one could argue that its success comes at the deficit of local commerce. Many local record stores, for example, had a lot of challenges to try and compete. “Whereas at Groupon... we’re trying to level the playing field for local business to allow them to compete.” A Seattle native, marathon runner and long-time music fan, Child discovered new music at local record stores while growing up. After moving to Chicago (Groupon’s headquarters), he developed a friendship with Jimmy Chamberlin, drummer for alternative-rock band Smashing Pumpkins. Child and Chamberlin share a passion— the discovery of new music. “That whole phenomenon has been replaced by iTunes and other online music services,” says Child. “There’s a lot of local commerce that doesn’t push the artists out.” Groupon recently launched concert deals to rally music fans to get off their couches and see musicians at local venues. Someday he plans to return to Seattle with his family. For now, he’s enjoying the ride. In the process, he may also help improve local brick-and-mortar businesses via social e-commerce. “The dreamer in me really likes helping local businesses thrive,” says Child. n
Fall 2011 29
alumni
Streamliner
EVENTS CALENDAR
Suzan DelBene works to support state business climate by creating a smarter tax system
Suzan DelBene (MBA 1990) has been a Microsoft vice president, CEO of a software startup, and microfinance consultant. Now she is on the other side, looking for ways to help businesses as director of the Washington State Department of Revenue. Governor Chris Gregoire appointed DelBene to head the state’s tax collection agency after her first foray into politics as a 2010 candidate for Washington’s Eighth Congressional District. That highly credible effort earned her the endorsement of the Seattle Times, which cited her “tremendous promise” and “sharp business and entrepreneurial skills.” DelBene freely admits she knew little about tax administration before agreeing to run the agency that collects more than 90 percent of state taxes. But observers say she has been a quick study on the complex intricacies of tax policy. After DelBene joined the agency, the governor directed her to examine ways it could improve the business climate by streamlining the tax system. DelBene consulted businesses and other stakeholders across the state to determine what the state could do to reduce the burden of complying with multiple state and local tax obligations. The resulting report issued 30 fo s t e r B USI N ESS
in June 2011 recommended that the state consider assuming administration of local business and occupation taxes, much as it now collects local sales taxes. Gregoire subsequently directed the Department to work with business and local governments to develop a proposal. Such an overhaul of the tax system would require legislative approval. Centralizing B&O tax collection would be the first step toward achieving the business community’s desire to be able to file one form in one place to comply with all tax obligations, DelBene says. “If we can reduce the compliance burden on businesses, that will give them more time to run their businesses, expand the economy, and we all win,” she says. The Eastside resident started her career in immunology research after graduating from Reed College in Portland. She first became interested in the business side of technology while working at ZymoGenetics in Seattle. That led her to enter the Foster School in 1988. She interned at Microsoft while in school and joined the company after graduation, marketing Windows 95 and other products. She then left Microsoft to help launch drugstore.com in 1998, and in 2000 became CEO of Nimble Technology, a data integration software firm. Along the way, she’s also mentored students at the Foster School. DelBene returned to Microsoft in 2004 as a corporate vice president for the mobile communications business, and in 2008 became a consultant at Global Partnerships, a microfinance nonprofit. Now that she is on the government side of things, DelBene’s business training has come in handy in evaluating ways to improve the efficiency of Revenue operations while developing feasible ways to streamline the state tax system. She said her goal is to improve the state’s business climate. That would be a major accomplishment indeed. n
October 2011 10 – 14 Global Biz Week 22 UW Social Ideas to Global Ventures Workshop 26 The Japan Disasters: New Lessons, New Opportunities 6pm, Shansby Auditorium 31 – Nov 4 Entrepreneur Week 2011 November 2011 2 Business Leadership Celebration Sheraton Seattle Keynote – Jamie Dimon December 2011 8 Minority Business Awards Sheraton Seattle Keynote – Scott Armstrong January 2012 21 IKEA International Case Competition February 2012 25 2012 MBA Challenge for Charity Auction 27 – Mar 3 8th Annual Global Social Entrepreneurship Competition March 2012 29 UW Environmental Innovation Challenge Visit foster.washington.edu/ events for details and more events.
Life Lessons William Khazaal and Claire Lee find that business is personal
William Khazaal seems more like an MBA grad than an undergraduate set to earn his BA after fall quarter (2011). That’s partially because, at 37, he took time before going to college. But it’s mostly because Khazaal has successfully merged his life lessons with his business studies and derived valuable insights. In 2009, Khazaal was diagnosed with multiple sclerosis (MS). Five weeks later he lost his father, leaving Phoenecia—his father’s restaurant in every sense—with an uncertain future. A difficult time, not least because Khazaal‘s mother and sisters relied on Phoenecia for their living. So he took over the restaurant; analyzed the volume of business, pricing and menu options; decided to overhaul operations based on some market research; and gifted it to his mom and sisters. Located on Alki beach in West Seattle, the venerable Phoenecia is now serving up a tapas-inspired menu that even includes a unique take on pizza. The new format is a hit, and more than half of the patrons represent a new and expanding clientele. Score one for Khazaal’s focus on entrepreneurship and marketing. While Khazaal’s vision upon graduation involves launching a local restaurant chain, he’s currently busy finishing up the last mile of academic study and managing distribution of a book. Begun as a project in an entrepreneurship class (“Creating a Company”) in which students team up to start their own businesses, “The MS Children’s Book” has sold roughly 2,000 copies
and is on its way to reaching the $150,000 goal the team set. Khazaal’s team from the entrepreneurship class was brainstorming a business model to raise money and awareness for MS. “The decision to go with a children’s book came from the convergence of questions my sons asked me about MS and the results of some social media polling,” recounts Khazaal. “On low energy days my six year old was afraid I was going to die or that he was going to catch MS too. It’s difficult for kids to understand.” Khazaal clearly has good ideas, and drive. So what else is he taking away from his experience at Foster? “I’m learning a lot from Generation Y,” says Khazaal. “They’re a lot less competitive with each other, much more collaborative and naturally inclined to work in groups. I’d also say they’re more socially and environmentally conscious.” There is one lesson he finds counterintuitive, however. “They don’t use the phone—they text,” says Khazaal. “We worked on a team project without a single phone call being made.”
Recent graduate Claire Lee (BA 2011), is another avid student of life whose business degree came about somewhat unexpectedly. “I wasn’t really interested in going into business,” says Lee. “My parents owned some businesses, my uncle ran a busy company. I was more interested in a holistic, liberal arts education.”
A concert pianist who’s played Carnegie Hall, Lee had dreams of majoring in comparative literature. But family matters forced her to leave school and help out the family business, saving up her money to return to UW when the opportunity arose. “I’d always thought of business school like a trade school,” says Lee. “And then I had this epiphany—business is simply an infrastructure, it connects people. And I realized that some of the best businesspeople take a very holistic view of things.” As she recalls Professor Lloyd Tanlu telling her, “success in business involves a great deal of critical thinking. You ask ‘why’ and you learn to listen.” Lee is starting her business career with Deloitte & Touche, as a business analyst in the firm’s consulting practice. Already she’s seeing the benefit of being strong across business disciplines. While her undergraduate emphasis was on accounting, marketing and sales, she sees some irony in going to work at an accounting firm, but in a consulting role within the strategy and operations division. “Foster taught me to deal with ambiguity,” says Lee. “My job’s about building mutually beneficial outcomes and I was taught to think on my feet. I learned how to deconstruct ideas, apply analytical thinking and distill out the useful components. You have to learn how to get to the core and throw out bad ideas in favor of the right approach.” It is fitting that one of Lee’s fond memories of her time at Foster involves Dean Jiambalvo’s remarks at the Sales Certificate Program Breakfast during spring quarter. “He spoke about the nobility of business and the virtuous cycle,” recalls Lee. “I really connect to the contribution side of the business balance sheet and I think Foster has taught me what I need to be successful at making a difference.” n
Fall 2011 31
First Person
Old School, New School One alum shares his thoughts on the transition from Balmer to PACCAR By Raja Das
If it is the artistic expression of classroom numbers written in marker on pieces of masking tape that you so desire in your business school, or the nostalgia of the days of yore in the form of yellowed “no smoking” signs above the chalkboards, or even just the unintentional energy efficiency of having two power outlets per classroom, then I am sorry to tell you that the Foster School of Business is no longer the right fit for you. Actually, I am really not that sorry, and no one else is either. Believed by locals to have been constructed some time during the Bronze Age, Balmer Hall long stood as the trusted place to get a premier business education in the Northwest. This monolith, seemingly carved from a single mass of concrete, was the home of the University of Washington Business School for decades, educating tens of thousands, with whom the building earned a deserving amount of comedic affection during its later years. However, as the school began working on its push to graduate from a regional power to a nationally recognized name, the need arose for a facility that would attract the best and brightest students, faculty, and staff. Just as we have watched U-Dub transition into Foster, many of us had the pleasure of watching the new era of our business school physically come together before our very eyes. Enter PACCAR Hall. As a true testament to the process, legendary finance professor, Robert “Rocky” Higgins, was told when he
32 fo s t e r B USI N ESS
first arrived in 1967 to not get too comfortable in his office, as they were planning construction of a new building. Seeing the renderings of the new building on the dean’s wall, Rocky remained reluctant to get comfortable until he was finally moved into his new office—in 2010—his final year of teaching before retirement. However, as Rocky or anyone else would tell you, PACCAR Hall was better late than never, and was certainly well worth the wait. Thanks to the generosity of alumni, the community, and PACCAR Inc, everyone who is a part of the Foster fabric can now enjoy this beautiful, carefully thought out, state-of-the-art facility. PACCAR Hall provides everything, from comfortable classrooms stacked with new technology and thoughtful acoustics, to numerous breakout rooms for group study, to common space where you can read a book (or Kindle) by the fire. As if that were not enough, baristas at the 2nd floor café will happily custom pour you a hot cup on a winter day as you head off to the library, which, by the way, is now connected directly to the building. When spring rolls around, you would be doing yourself a disservice if you did not spend at least one afternoon out on the 4th floor terrace, which is perhaps one of the most unique and thoughtful gifts that the planning committee and the architects gave to the people of Foster. As a former student, it is easy to simply think from the perspective of a student. However, most students will only be spending a couple of years inside those walls. The greatest beneficiaries of PACCAR Hall may be the faculty, who seem to be much happier now. Perhaps they do not miss the lack of rhyme or reason behind
office numbering in their former facility (who doesn’t like walking around in circles?). Or perhaps it is the fact that they now have windows facing each other’s offices from across the way, allowing them to make faces at their colleagues, along with other interdepartmental hijinks. In any case, it is clear that they are happier in PACCAR, and a happier faculty means three things: keeping our best professors, more inspired research, and partial credit on exams (there I go thinking like a student again). In closing, I hope that all current and future members of the Foster community take great pride in the building that you have been given. In the business and education worlds today, it is very easy to feel entitled to these sorts of things, but just remember that it was through the generosity of many who came before you that such a seemingly simple thing as a power outlet for every student’s laptop has been made possible. To the students out there, be proud of where you go to school, and look forward to returning as alumni. Reserve any and all embarrassment not for your building, or for the first job you get after graduating, or for some arbitrary school ranking, but instead for that 1.6 you squeaked by with in Accounting, since that is, after all, the way the business school experience is supposed to be.
Raja Das is a 2011 MBA graduate of the Foster School, and served as MBA Association President during the 2010-2011 school year. He is one of the privileged few to have had classes in both Balmer and PACCAR Halls. n
You Can Help Equip Tomorrow’s Business Leaders Today
When you include the Foster School of Business in your will, you’re making an important investment in our future business leaders. You can direct your gift to a particular program, center or area of study. You can put a top business education within reach. You can help students go abroad, sponsor competitions, underwrite faculty research and transform careers and lives.
To learn more about making a bequest to the Foster School, please contact the Advancement Office at 206.543.0304.
Discover what’s next. It’s the Washington Way.
足N on profit Organization U.S. Postage
PA I D Seattle, WA Permit No. 62 A DVA NCEMENT Box 353200 Seattle , Wa 98195-3200
foster
fall 2 0 1 1